ex10-5.htm


    
      

    

    EXHIBIT 10.5

    
       

      Confidential Treatment

       

    

    SUPPLY
AND DISTRIBUTION AGREEMENT

     

    This
SUPPLY AND DISTRIBUTION AGREEMENT (this “Agreement”), is made
as of September 16, 2009 (“Effective Date”) by
and between Printcolor Screen
Ltd., a Swiss company with its principal place of business at Welschloh
299 CH-8965 Berikon, Switzerland (“SUPPLIER”), and Applied DNA Sciences, Inc., a
Delaware corporation its principal place of business at 25 Health Sciences Drive
Suite 113, Stony Brook, New York 11790 (“BUYER”, and together
with SUPPLIER, the “Parties”).

     

    RECITALS

     

    WHEREAS,
the Parties desire to enter into this Supply and Distribution Agreement whereby
SUPPLIER will manufacture and supply certain products for BUYER under the terms
and conditions set forth in this Agreement, and BUYER will purchase and sell
such products to its customers.

     

    NOW,
THEREFORE, and in consideration of the mutual promises, covenants,
representations and good and valuable consideration set forth herein, the
adequacy of which is hereby acknowledged, the Parties hereto agree as
follows:

     

    ARTICLE
1.                         PRODUCTS,
ORDERS AND PRICING.

     

    1.1                 Manufacturing
Services.  During the term of this Agreement, SUPPLIER shall
manufacture and supply to BUYER on an exclusive basis (except as set forth in
Section 8.1 of this Agreement) and BUYER shall purchase
and acquire from SUPPLIER, those quantities of the AzSure formulation or any
derivatives thereof (the “Products”) as are
ordered by BUYER from time to time under, and subject to the terms and
conditions of, this Agreement.  Notwithstanding anything herein to the
contrary, BUYER shall not be obligated to utilize SUPPLIER’s manufacturing or
supply services with respect to any minimum amount of the Products or at
all.

     

    1.2                 Purchase
Price.  Prices for the Products sold under, and for the term
of, this Agreement shall be as set forth on the price list that appears as Schedule A to this
Agreement (the “Purchase Price”),
except for permitted adjustments made from time to time by written agreement of
the Parties (in which case an amended Schedule A shall
replace the old Schedule A and shall
be attached to this Agreement).

     

    1.3                 Payment; Payment Terms;
Payment Currency.  BUYER shall pay the amounts invoiced by
SUPPLIER for the Products ordered by BUYER.  In case of any dispute or
question, SUPPLIER shall first contact BUYER and attempt in good faith to
resolve the dispute/question.  Payments by BUYER shall be made
directly to SUPPLIER on or before the date which is sixty (60) days after the
date of receipt of such invoice.  All payments required to be made by
BUYER hereunder shall be made in Euros.

     

    1.4                 Compliance with
Law.  All of the Products to be manufactured or supplied
hereunder shall be made in accordance with all applicable laws and regulations
and shall be shipped with an MSDS.  In addition, SUPPLIER represents
and warrants that: (i) the Products, when received, shall meet
specifications and shall be of merchantable quality, fit and safe and free from
defects in material, design and workmanship; (ii) it possesses all licenses
and permits required by any governmental jurisdiction in which it or its
employees operate pursuant to this Agreement that may be required to manufacture
and sell the Products; (iii) the Products are manufactured and labeled in
compliance with all applicable environmental, health and safety laws and
regulations; (iv) the Products are fit for a particular purpose intended;
and (v) SUPPLIER and its customers shall have good title to all Products
sold to BUYER free and clear of all liens, claims and encumbrances.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.5                 Placing of
Orders.  During the Term or any Renewal Term of this Agreement,
BUYER shall submit written purchase orders to SUPPLIER clearly setting forth the
amounts of Product to be purchased by BUYER and requested shipping dates for the
ordered Products.  All purchase orders shall be in accordance with the
terms and conditions of this Agreement.  In the event of any conflict
between the terms of this Agreement and the terms of any purchase order issued
by BUYER, the terms of this Agreement will govern.

     

    ARTICLE
2.                         TERM
AND TERMINATION.

     

    2.1                 Term.  The
term of this Agreement shall continue from the Effective Date until the earlier
of (i) five (5) years after the Effective Date and (ii) the date this Agreement
is otherwise terminated in accordance with its terms (the “Initial
Term”).

     

    2.2                 Termination.  This
Agreement may be immediately terminated by either party upon (i) failure of the
other party to comply with laws and regulations which materially affect such
party’s contracting rights or reputation and where such failure is not cured
within thirty (30) days of receipt of written notice thereof; (ii) any material
breach of this Agreement by the other party which is not cured within thirty
(30) days of receipt of written notice thereof or (iii) the mutual agreement of
the Parties.

     

    2.3                 Renewal
Term.  This Agreement will automatically renew for consecutive
one (1) year terms under the same terms and conditions set forth herein (each a
“Renewal Term”)
unless terminated by either party upon delivering written notice to the other
party at least ninety (90) days but not more than one hundred twenty (120) days
prior to the end of the then existing term.  The Renewal Term(s), if
any, and the Initial Term are collectively referred to herein as the
“Term.”

     

    2.4                 Rights on Termination or
Expiration.  In the event of the termination or expiration of
this Agreement, in addition to all other remedies available at law or in equity,
the Parties shall have the following rights and obligations:

     

    
      	 
      	
              (a)

            	
              Within
      ten (10) days after the termination or expiration of this Agreement, each
      party shall return to the other any and all proprietary and Confidential
      Information of such party then in its possession or under its
      control.

            
	 	 	 
	 
      	
              (b)

            	
              Termination
      or expiration of this Agreement shall not release any party from the
      obligation to make payment to the other party of all amounts then and
      thereafter due and payable under this Agreement within thirty (30) days of
      termination or expiration, as the case may be.

            
	 	 	 
	 
      	
              (c)

            	
              Unless
      BUYER otherwise instructs SUPPLIER in writing, SUPPLIER shall fulfill all
      outstanding purchase orders submitted by BUYER in accordance with Section
      1.5 of this Agreement.

            
	 	 	 
	 
      	
              (d)

            	
              BUYER
      will have the option of requiring SUPPLIER to continue to supply the
      Products for a period up to six (6) months under the same terms applicable
      to this Agreement in order to maintain a continuity of supply in the
      transition.

            


    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    ARTICLE
3.                        Delivery.  BUYER
shall provide SUPPLIER with reasonable lead time for the fulfillment and
delivery of purchase orders and SUPPLIER shall timely fulfill orders for
purchases received from BUYER and shall deliver the products wherever so
instructed by BUYER as follows:

     

    3.1.                  
Ex works (incoterms) Berikon, Switzerland.  SUPPLIER shall supply
shipping documents and the safety label.

     

    3.2.                 
SUPPLIER shall supply a batch identification number/barcode and MSDS with each
shipment, the content of the MSDS in accordance with applicable laws and
regulations, containing the AzSure product name.

     

    3.3.          
BUYER shall supply product labels printed at its own expense to
SUPPLIER.  The product labels will conform to the AzSure style and
contain a product code issued by SUPPLIER.

     

    ARTICLE
4.                        Time of
essence.  Time is of the essence as to the obligations of
SUPPLIER under each purchase order issued by BUYER in accordance with Section
1.5 of this Agreement.  The agreed upon lead times for the product
will be indicated on each such purchase order.  SUPPLIER agrees to
operate within the lead times agreed to by the parties as indicated on each such
purchase order.

     

    ARTICLE
5.                        Quality
Control.  The quality of the products, including, among other
things, the specifications in manufacturing the products, shall meet the quality
requirements of BUYER’s customers that are provided to SUPPLIER or otherwise
reasonably understood by SUPPLIER prior to acceptance of any purchase order
solely to the extent the foregoing relate to the products.

     

    ARTICLE
6.                        Risk of
Loss.  BUYER shall bear the risk of loss of, or damage to, any
of the products after the products have been placed on trucks at the loading
dock at SUPPLIER’s plant located at Berikon, Switzerland (the “Plant”) for transport
to BUYER’s customers or other place designated by BUYER.  SUPPLIER
shall bear the risk of loss for the products prior to such time (fob SUPPLIER’s
Plant).

     

    ARTICLE
7.                        Inspection of the
products.  BUYER and its representatives may, upon reasonable
notice and during regular business hours, inspect the manufacture of products
and conduct related quality control; provided, that such right of inspection
shall  be limited to one inspection per quarter of each
year.  In connection therewith, SUPPLIER shall provide reasonable
assistance and access to SUPPLIER’s facilities, personnel and
materials.  SUPPLIER shall comply with BUYER’s reasonable quality and
inspection procedures.

     

    ARTICLE
8.                        
MUTUAL REPRESENTATIONS AND WARRANTIES.

     

    8.1                 Each
party represents and warrants to the other that it has the right and authority
to enter into this Agreement and to perform all of its respective obligations
and undertakings herein.  Each party further represents and warrants
to the other that (i) the rights and privileges granted or to be granted
hereunder are and will at all times be free and clear of any liens, claims,
charges or encumbrances; and (ii) neither party has done or omitted to do, nor
will do or omit to do, any act or thing that would or might impair, encumber, or
diminish the other party’s full enjoyment of the rights and privileges granted
and to be granted under this Agreement.

     

    8.2                 Each
party represents and warrants that it is duly organized and existing in good
standing under the laws of the jurisdiction in which it is organized, is duly
qualified and in good standing as a foreign corporation in every state in which
the character of its business requires such qualifications, and has the power to
own its property and to carry on its business as now being
conducted.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    ARTICLE
9.                        COVENANTS.

     

    9.1                 BUYER
recognizes that SUPPLIER is currently manufacturing and/or supplying and may
manufacture and/or supply the AzSure formulation (without marking the product or
literature as “AzSure”) to Villiger in Switzerland.  SUPPLIER will not
sell to Villiger the “AzSure” formulation in the azure
color.  SUPPLIER agrees that it will not enter into any agreement for
the manufacture of Products that would impair its ability to perform its
obligations hereunder on a timely basis.

     

    9.2                 BUYER
agrees to source AzSure or similar formulations only from SUPPLIER during the
term of this Agreement.

     

    9.3                 The
Parties agree that BUYER owns the rights to the pending trademark for “AzSure”
and its associated art except for the chemical composition of the ink, which is
SUPPLIER’s intellectual property.

     

    9.4                 BUYER
agrees to make commercially reasonable efforts to sell AzSure to the cash in
transit (CViT) industry globally.  After an initial business
development phase of no more than 12 months, BUYER will make commercially
reasonable efforts to target an annual sales volume of approximately 10 tons of
the Product.  BUYER will develop marketing collaterals at its own
expense.  SUPPLIER will be mentioned as the “development partner” for
AzSure in BUYER’s sales and marketing literature.

     

    9.5                 BUYER
reserves the right to appoint sales agents and to offer exclusive supply within
specific markets.

     

    9.6                 SUPPLIER
agrees to supply BUYER with the methods of quality assurance required for
testing each batch of the Product.  SUPPLIER agrees to provide BUYER with a
quality control report for each batch of the Product.  SUPPLIER will
not alter the yet to be agreed upon formulation for the Product without the
approval of BUYER.

     

    ARTICLE
10.                      CONFIDENTIAL
INFORMATION.

     

    10.1               Each
party acknowledges and agrees that it may have access to information, including,
but not limited to, intellectual property, trade secrets, business information,
ideas and expressions, which are proprietary to and/or embody the substantial
creative efforts of the other party (“Confidential
Information”).  The Parties agree that Confidential Information
will remain the sole and exclusive property of the disclosing party (“Disclosing Party”),
and the receiving party (“Receiving Party”)
agrees to maintain and preserve the confidentiality of such information,
including, but without limitation, taking such steps to protect and preserve the
confidentiality of the Confidential Information as it takes to preserve and
protect the confidentiality of its own confidential information.  All
materials and information disclosed by either party to the other will be
presumed to be Confidential Information and will be so regarded by the Receiving
Party unless, the Receiving Party can prove that the materials or information
are not Confidential Information.  For the purposes of this
Section:

     

    10.2               The
Parties agree that the Confidential Information will be disclosed for use by the
Receiving Party only for the limited and sole purpose of carrying out the terms
of this Agreement.

     

    10.3               The
Receiving Party agrees not to disclose or permit any other person or entity
access to the Confidential Information, except that such disclosure will be
permitted to an employee, agent, representative or independent contractor of the
Receiving Party requiring access to the same.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    10.4               The
Receiving Party agrees: (i) not to alter or remove any identification of any
copyright, trademark or other proprietary rights notice which indicates the
ownership of any part of the Confidential Information, and (ii) to notify the
Disclosing Party of the circumstances surrounding any possession, use or
knowledge of the Confidential Information by any person or entity other than
those authorized by this Agreement.

     

    10.5               Confidential
Information will exclude any information that (i) has been or is obtained by the
Receiving Party from a source independent of the Disclosing Party and not
receiving such information from the Disclosing Party, (ii) is or becomes
generally available to the public other than as a result of an unauthorized
disclosure by the Disclosing Party or its personnel, or (iii) is independently
developed by the Receiving Party without reliance in any way on the Confidential
Information provided by the Disclosing Party; or (iv) the Receiving Party is
required to disclose under judicial order, regulatory requirement, or statutory
requirement, provided that the Receiving Party provides written notice and an
opportunity for the Disclosing Party to take any available protective action
prior to such disclosure.

     

    ARTICLE
11.                       INDEMNIFICATION;
LIMITATION ON DAMAGES.

     

    11.1               SUPPLIER’s
Indemnification.  SUPPLIER hereby agrees to indemnify, defend,
and hold BUYER harmless from any and all third party claims, losses,
liabilities, causes of action and costs (including reasonable attorneys’ fees)
arising from, or on account of, or related to any breach by SUPPLIER of its
obligations, representations and warranties hereunder.

     

    11.2               BUYER’s
Indemnification.  BUYER hereby agrees to indemnify, defend, and
hold SUPPLIER harmless from any and all third party claims, losses, liabilities,
causes of action and costs (including reasonable attorneys’ fees) arising from,
or on account of, or related to any breach by BUYER of its obligations,
representations and warranties hereunder.

     

    11.3               Limitation on
Damages.  NEITHER PARTY NOR ANY OF ITS RESPECTIVE AFFILIATES,
SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY OTHER INDIVIDUAL OR ENTITY FOR ANY
INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR INCIDENTAL LOSS OR
DAMAGE OF ANY KIND OR NATURE, RELATING TO OR ARISING OUT OF THIS AGREEMENT
INCLUDING BUT NOT LIMITED TO ANY LOSS OF REVENUES, ANTICIPATED PROFITS OR
SAVINGS, OR LOSS BY REASON OF SHUTDOWN IN OPERATION OR FOR INCREASED EXPENSES OF
OPERATION.

     

    ARTICLE
12.                       GENERAL.

     

    12.1               Governing
Law.  This Agreement shall be interpreted in accordance with
the laws of the State of New York, without regard to the conflicts of laws
principles thereof.  The Parties agree that jurisdiction over and
venue in any legal proceeding arising out of or relating to this Agreement will
exclusively be in the state or federal courts located in New York County, New
York.

     

    12.2               Entire
Agreement.  This Agreement, including the Exhibit(s) attached
hereto, constitutes the entire agreement and understanding between the Parties
and integrates all prior discussions between them related to its subject
matter.  No modification of any of the terms of the agreement will be
valid unless in writing and signed by an authorized representative of each
party.

     

    12.3               Assignment.  This
Agreement may not be assigned by any party hereto to any other person, firm, or
entity without the express written approval of the other party hereto and any
attempt at assignment in violation of this Section will be null and void;
provided, that, notwithstanding the foregoing, BUYER may assign this Agreement,
and grant a security interest in this Agreement, to any senior lender to BUYER
without being required to obtain the consent of SUPPLIER, and SUPPLIER shall
have the right to assign this Agreement to an affiliate of SUPPLIER upon written
notice to BUYER, without being required to obtain the consent or approval of
BUYER.  Without limiting the foregoing, SUPPLIER shall not,
voluntarily or by operation of law (including, without limitation, by transfer
of the stock of SUPPLIER), assign or transfer, this Agreement or any interest
herein, or any right or obligation hereunder, without first obtaining the
written consent of BUYER, which consent shall not be unreasonably
withheld.

     

    
      
         

      

      
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    12.4               Notices.  All
legal notices required or permitted hereunder will be given in writing addressed
to the respective Parties as set forth below and will either be (i) personally
delivered, (ii) transmitted by postage prepaid certified mail, return receipt
requested, or (iii) transmitted by nationally recognized private express
courier, and will be deemed to have been given on the date of receipt if
delivered personally, or three (3) days after deposit in mail or express
courier.  Either party may change its address for purposes hereof by
written notice to the other in accordance with the provisions of this
Subsection.  The addresses for the Parties are as
follows:

     

    
      	
              SUPPLIER

            	
              BUYER

            
	 	 
	
              Printcolor
      Screen Ltd.

              Attn:                     

              Welschloh
      299

              CH-8965
      Bericon

              Switzerland

            	
              Applied
      DNA Sciences, Inc.

              Attn:
      Kurt Jensen

              25
      Health Sciences Dr., Suite 113

              Stony
      Brook, NY 11790

              USA

            


    

     

    12.5               Rights to Injunctive
Relief.  The Parties acknowledge that remedies at law may be
inadequate to provide full compensation in the event of a material breach
relating to either party’s obligations, representations, and warranties
hereunder, and the non-breaching party will therefore be entitled to seek
injunctive relief in the event of any such material breach.

     

    12.6               Force
Majeure.  No party will be liable for, or will be considered to
be in breach of or default under this Agreement on account of, any delay or
failure to perform as required by this Agreement as a result of any causes or
conditions that are beyond such party’s reasonable control (such as war, riot,
attack of terror, insurrection, rebellion, strike, lockout, unavoidable
casualty, or damage to personnel, material or equipment, fire, flood, storm,
earthquake, tornado, or any act of God) and that such party is unable to
overcome through the exercise of commercially reasonable
diligence.  If any force majeure event occurs, the affected party will
give prompt written notice to the other party and will use commercially
reasonable efforts to minimize the impact of the event.  However, if a
force majeure event prevents a party’s performance of a material covenant set
forth herein, the other party can immediately terminate this
Agreement.

     

    12.7               Waiver.  The
waiver, express or implied, by any party of any breach of or right
under  this Agreement by another party will not waive any subsequent
breach or right by such party of the same or a different kind.

     

    12.8               Headings.  The
headings to the Sections and Schedules of this Agreement are included merely for
convenience of reference and will not affect the meaning of the language
included therein.

     

    
      
         

      

      
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    12.9               Independent
Contractors.  The Parties acknowledge and agree that they are
dealing with each other hereunder as independent contractors.  Nothing
contained in this Agreement will be interpreted as constituting either party the
joint venturer, employee or partner of the other party or as conferring upon
either party the power of authority to bind the other party in any transaction
with third parties.

     

    12.10             Severability.  In
the event any provision of this Agreement is held by a court or other tribunal
of competent jurisdiction to be unenforceable, such provision will be reformed
only to the extent necessary to make it enforceable, and the other provisions of
this Agreement will remain in full force and effect.

     

    12.11             Counterparts.  This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.  For purposes hereof, a facsimile copy of this Agreement,
including the signature pages hereto, will be deemed to be an
original.  Notwithstanding the foregoing, the Parties will deliver
original execution copies of this Agreement to one another as soon as
practicable following execution thereof.

     

    12.12             Cooperation in
Drafting.  The Parties have cooperated in the drafting and
preparation of this Agreement, and it will not be construed more favorably for
or against any party.

     

    12.13             Attorney’s
Fees.  Should any party hereto initiate a legal or
administrative action or arbitration proceeding (an “Action”) to enforce
any of the terms or conditions of this Agreement, the prevailing party (as
determined by the court, arbitrator or other fact-finder) will be entitled to
recover from the losing party all reasonable costs of the Action, including
without limitation, reasonable attorneys’ fees and costs.

     

    [Signature Page
Follows]

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    
      EXHIBIT 10.5

       

      Confidential Treatment

       

    

    IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.

    


    
      	 
      	
              SUPPLIER

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Printcolor
      Screen Ltd.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Dieter
Hermann__________

            	 
      
	 
      	 
      	
              Name:

            	
              Dieter
      Hermann

            	 
      
	 
      	 
      	
              Title:

            	
              CEO

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              BUYER

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              APPLIED
      DNA SCIENCES, INC.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ James A. Hayward_______

            	 
      
	 
      	 
      	
              Name:

            	
              James
      A. Hayward

            	 
      
	 
      	 
      	
              Title:

            	
              CEO

            	 
      


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      EXHIBIT
10.5

      


      Confidential
Treatment



    SCHEDULE
A

     

    
      
        
          	
                  
AzSure Pricing Scheme From
      PrintColor to APDN

                


        

         

        
          	 
      	
                  Ship
      in 200 liter Drums

                	
                  Ship
      in 20, 30 or 50 liter

                  Pourer
      Cans

                
	 	
                  60
      day

                  terms

                	
                  Prepay

                  (2)

                	
                  60
      day

                  terms
      (1)

                	
                  Prepay

                  (2)

                
	      
                  Total
      Volume Per

                	 	 
	
                  Order
      (liters)

                	
                  Price
      Per Liter

                	
                  Price
      Per Liter

                
	 
      	 
      	 
      	 
      	 
      
	
                  200

                	
                  €
      ***

                	 
      	
                  €
      ***

                	 
      
	 
      	 
      	 
      	 
      	 
      
	
                  1,000

                	
                  €
      ***

                	 
      	
                  €
      ***

                	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                  Blanket
      Orders (3)

                
	 
      	 
      	 
      	 
      	 
      
	
                  3,000

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                
	 
      	 
      	 
      	 
      	 
      
	
                  6,000

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                
	 
      	 
      	 
      	 
      	 
      
	
                  10,000

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                	
                  €
      ***

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


        

      

       

      	
              (1)
      7% Increase in Price Per Liter

            
	 
      
	
              (2)
      5% Decrease if APDN Prepays Blanket Order

            
	 
      
	
              (3)
      Blanket orders: minimum 3,000 liters or above per
  order